Airea Share Discussion Threads

[petebarnes1] 15/5/2018 14:02

my personal feeling is offer will come around 80p

[petebarnes1] 15/5/2018 13:59

And don't forget the share price recovered to 50p mark after disposal of loss making element, so the offer in my opinion after taking out triggers fluff, is the same so i am unsure what all the fuss is about. GLA

[petebarnes1] 15/5/2018 13:53

Bit of a one sided post from trigger, as far as i am concerned i have never posted on the other thread from what i recall. I have not thrown figures around just an educated guesstimate. All good here

[mesquida] 14/5/2018 14:39

Romboid, I too am a long term shareholder, back to the days of Sirdar, good size holding, not disclosable but probably more than our friend petebarnes has! I have watched the transformation of this Company under new management during the past few years, and frankly on the basis of what they have achieved during this period I would now reject any offer pitched at less than 80p. An offer at that level or above would have to be considered seriously though, representing as it would a substantial premium to the share price average during the past five years. If on the other hand Halstead walk away and the price subsequently drops, then I would have no hesitation in buying more, which is another way of saying "yes, Board of Directors, I trust you, and thanks for everything you have done here". The next ten days could prove to be very interesting indeed!

[impvesta] 14/5/2018 13:38

Great post (414) Trigger. Good to get a view "from the other side"!

[rhomboid] 14/5/2018 13:31

Hi Trigger
Excellent post..nearly all of which I agree with...however where Halstead struggle is generating top line growth 5yr CAGR is less than 2%, as such it looks as if a move into related product areas makes enormous sense for them with largely the same universe of specifiers/customers & distributors. As you point out their distribution heft/reach could render Burmatex a near perfect fit. Aeria is a v low risk, lowly rated target for them where all the business restructuring is largely complete, the new machinery up and running and the new products developed & launched ..with 2 new products due next month. If I was a Halstead shareholder I’d be delighted with a deal as it’s going to be funded out of the surplus cash sitting earning v little!

As an Aeria shareholder for the last 3 years I’m hoping they pay a generous price or don’t bid as I like the way Burmatex future looks from where I’m sitting 🙂

[trigger blade] 14/5/2018 13:13

rhomboid,

I wasn't looking at a chart when I said doubled in a few days, I just had a memory of it being 30p not long ago.

You're clearly a long term shareholder, with an understanding of the business. My mild irritation is with instant experts like pete, who start throwing figures around with nothing to support them. I'm a small time, long term JHD shareholder and on that thread, he said the bid would need to be £1. I asked him how he'd arrived at that price and he disappeared.

He's suggesting various prices on here, all currently lower than £1, as well as the ludicrous assertion that JHD need this bid to support their own share price. That's a share price that has multiplied many times in the last 30 years, as has turnover and profit. I'm constantly amazed at how JHD have become successful worldwide in a very mundane business area. The share price has dropped from its all time high, but I doubt JHD needs this bid for credibility reasons.

JHD is a cautious company and I doubt they'll go all gung ho now Geoffrey Halstead's retired. Although it's a related business area, there doesn't appear on the surface to be any great synergy in terms of products and manufacturing. As a substantial buyer of raw materials, JHD might be able to squeeze some savings out of raw materials and as you said, some management cost saving too.

The most obvious area of synergy is distribution, particularly overseas. JHD's distribution worldwide is strong, with a number of overseas subsidiaries against Burmatex with (I'm guessing), an Export Sales Manager, tasked with finding local distributors, whose main focus might not be on Burmatex products.

Compare and contrast. The JHD website lists contact details in 77 countries. The Burmatex website says they sell in Europe, the Middle East and Far East and if you want more details, get in touch.

I don't have the information, but I suspect that 30-35 years ago, JHD and AIEA (or its eventual constituent parts) were not that different in size (turnover and profit) and if JHD could transform AIEA the way it transformed its own business, that would be great for JHD shareholders and if AIEA shareholders invested the profit from a successful JHD bid, it would be great for them too!

I suppose I'm assuming a cash bid, is there any possibility of a bid at least being partly in shares? I am confident that won't overpay (although I accept I don't know what that might mean). They picked the Teesside plant up for a song and I can't see them needing AIEA badly enough to get carried away with the price. We shall see.

I'm going for a lie down, I haven't concentrated so much on one thing for a very long time :-)

[petebarnes1] 14/5/2018 08:23

rhomboid, i to am a buyer here and have bought , and can easily see 80p short term.

[trident5] 13/5/2018 17:48

Must admit, I can't see the price falling too far if the bid doesn't go through.

[rhomboid] 13/5/2018 17:20

It did ..but that was driven by me taking all the stock I could get after reading the results and getting my calculator out, in particular looking at the date the new machine was installed,new products were launched & what that implied about the rate of climb in profits 🤔as a result because the price moved more than 10% JHD had to declare their hand as they’d been mulling a bid. Either way we’ll soon see but at the current share price I’m still a buyer & I’m sure others are doing similar sums & getting the same answers

[trident5] 13/5/2018 16:29

"On April the 4th, the day before the bid approach the shares closed at 50.75".

Maybe so Rhomboid - but didn't the price fly up the day before, forcing an announcement from JHD before they had even approached Airea.

[rhomboid] 13/5/2018 16:01

Hi Trigger
On April the 4th, the day before the bid approach the shares closed at 50.75. It had risen because of the results & closure of Ryalux RNS with accompanying dividend..so we’re 20% higher not double. If you can point to any deal that gets done with a non distressed seller at a premium of only 20% i’ll be surprised...no shocked

I’m with you on the unlikeliest idea of JHD being taken out by the mighty AIEA tho🙂

[trigger blade] 13/5/2018 15:07

There looks to be a fair bit of wishful thinking and guessing going on here.

pete's suggested any price up to £1 should be achievable and since he predicted the share price would get to 70p a few days ago, it's only dropped.

I admire irenekent's optimism at the prospect of AIEA (market cap £26m, doubled since the rumour of an offer) eventually taking over JHD, one of the most consistent AIM performers over many years (market cap £830m, down from £1 billion last year). I'm assuming it was a tongue in cheek remark and the smiley fell off :-)

[irenekent] 12/5/2018 12:43

tft & rhomboid

Many thanks for the updates from the AGM. As a long term investor in this company I am happy to hold if the bid is rejected as inadequate. I feel that the future is good either way. My feeling is that Halstead need us more than we need them. At some point in the future we might be interested in taking them over!

I.

[rhomboid] 11/5/2018 19:39

I too was at the AGM

My take:

‘Neil Rylance CEO
Martin Toogood Chairman
Roger Salt FD/Co Sec
James Halstead sent a mute observer..who’d bought one share
NOMAD in attendance
c 20 shareholders..many ex employees

V warm welcome , great overview from Martin Toogood detailing Ryalux closure etc
Formal business passed on show of hands..nearly 100% proxy votes in favour

Then Q’s which for me boiled down to these key points in no particular order

They spent years getting ducks in a row to sort Pension scheme, now in surplus..could suspend contributions..up to the Board, been v creative to de risk it ..

Same re Ryalux closure ..shrinking it down to the point where it was possible to exit without risking the core business

Same re Surplus properties..5 leases down to 1 which ends soon leaving 10.5 acre freehold Ossett Mill site -Burmatex & £3.2m investment site in Bury leased for 10 yrs at £270k pa

Tenant is rock solid ..see attached

Most important point was rate of improvement in Burmatex post investment..took 1 yr for new loom to bed in, new launches only started end 2017 ..reception “amazing ‘

Now got full range covering all price points/market niches..2 more launches scheduled for next month..no crossover with Halstead..other than they’re both flooring related

Burmatex now 70-80% capacity utilised..1.5m USD loom might well need a duplicate..it took a year to get to grips with it but new one would be quick, Ossett plenty big enough 4 growth

My take..18 mths report is concealing a classic business reinvention..run rate in terms of P&L is c£4m per annum (my guess)

Mgt are on top of the business..in short I’m v happy to hold

[cisk] 11/5/2018 19:09

TFT - thank you very much for such a great post, appreciated. Suspect some folk are selling out as no bid news. Personally I agree with you, JHD won't overpay and probably they would need to offer c.80p, and that's probably too much for them. Not sure that 80p would do it really either, I guess some would want £1 which is probably pushing it.

[thirty fifty twenty] 11/5/2018 18:49

I am surprised to see the selling after the AGM on Thurs which i thought was good news.
obviously they didnt say anything specific but the directors seemed relaxed and in jolly, albeit efficient moods, which i thought was a positive sign. But maybe the seller has a better read of body language than me!!

regarding ongoing businesses....
profis in the last 12 mths were 2.8m
in the previous 12 mths to june 16 they were 3.3m.
in 2017 however they were learning re the nmew machine so were operating inefficiently they said - for instance staff had to go to USA for training. The new machine though now is doing well and very very simple to operate and maintian.
they talked confidently re sales prospects, the reception for new products and being at 60-70% capacity with no fear of current plant being able to handle c.24m/26m of sales.. so i read that as very bullish.
certianly i assuem the ongoing business will have higher profitiability ongoing as they reap learning, training and efficiencies so my fcts are 3m for 2018 (i..e EBITDA of 3.3m)

from that must come 400k going to the pension to give ongoing 2.9m EBIDTA with low expedcted cap ex requirements.

so very simplistically at 8 times EBITDA
gives EV of 23m + 2m CASH (after 5p special divi paid) + 3.4m Investment property (they talked about favourably) and urplus CASH from the run down of the p&M of the closed business = 0.5m = 29m = c.70p
that to me seems like a decent assessment of ongoing value maybe discounted 10% for a small cap and illiquid - though with authority to buy back 15% and track record of having done so that should be an underpin to the price of 60p.

for JHD must surely pay a premium to that.
for starters they could save on the 0.6m PLC costs.. directors, NED, lsiting fees etc...
that would be worth 4.8m to them at 8times rating (12p a share) (or 5p a share if say share 50/50with themselves and AIEA shareholders)
the second big cost saving i think would be in economies of scale with the sales force...
i'm estiamting c.2% of sales = c.400k a year - again worth an extra (almost 8p) a share, (or 4p is shared 50/50)

so even without a bid premium i think it is fairly easy to see how JHD could pay 20p but likely 10p more that my estiamte of future value which is c.60p to 70p.

nearly all the shareholder i met had decent size holdings , knew the mgt over a number of years and were quite relaxed if a bid happened or not. Obviously a bid is mostly preferable but if JHD didnt offer the right price then the happy to hold and benefit from future dividends, special dividends, share buy backs and possible value in the 10.5 acre manufacture site with ultiamtely development potential.

personally i doubt if JHD will pay up sufficiently as i think they are too conservative, again severla shareholders saw any price dip post non-bid news as a time they would top up , not that the company is focused and rationalised.

(btw the main reason for the closure of the business was that several property leases have expired in the last 2 years - the last one being in june 2018 so it has been a very efficnely and CSH focused run down over the last 2 years.

All IMHO, DYOR + BoL
(bid decision likely within next 10 days)
AIEA is in my top5 hldgs

[petebarnes1] 09/5/2018 09:59

well not long now guys hold and await offer

[illiswilgig] 04/5/2018 23:35

'Isn't it significant that the request for extension came from Airea and not JHD? Suggests to me that the JHD bid terms are not overly generous and Airea are trying to rally opposition to it, to get them to offer better terms, or to drum up other interest.'- Westcountryboy

Hi WCB - no it's not that significant. Under rule 2.6 of the Takeover code only the company potentially in receipt of a bid can request an extension. The 'put up or shut up' rule. ie JHD cannot request an extension, only Airea can request an extension. If Airea opposed a bid they would simply have failed to request an extension and allow the JHD potential bid to lapse. That they have requested a bid signifies that they are interested to see what JHD bid, not that they are desparate to accept,

cheers

Illiswilgig

[petebarnes1] 04/5/2018 08:41

morning all

[petebarnes1] 03/5/2018 19:43

will get over 70p tomorrow

[impvesta] 03/5/2018 16:41

"fillipe3 May '18 - 14:09 - 395 of 397
0 0 0
Best Bid/Ask - 65p v 69p..... 10k v (only)5k.

Edit; Best ask of 69p is being paid in full."

My level 2 shows a trade high of 67.75p at 14:15. Doesn't show any trades at 69p.

[petebarnes1] 03/5/2018 14:20

lol gripfit